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TMI Blog1998 (6) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... 88, and it was found that the assessee-firm had, inter alia, installed one electric motor of 1000 H.P. In the books of account, instead of showing purchase of an electric motor of 1000 HP, purchase of an electric motor of 500 HP was shown, on the basis of a bill showing purchase of an electric motor of 500 HP. As per para 2 of the assessment order, the Assessing Officer recorded the statement of Sh. H.R. Gupta son of Sh. Shankar Dass, partner of M/s Pritam Singh Hunjan Bros. wherein he was asked to explain as to why electric motor of 1000 HP installed in the factory, was not depicted in the books. Relevant question and answers given by Sh. Gupta, as reproduced in the assessment order, are as under:- "Q. Electric motor of Bharat Heavy Electricals Ltd. of 1000 Horse Power, has been installed in your factory premises but it has not been shown in the books of a/c. Please explain, why it should not be presumed that it has been purchased out of the books? A. This motor is of 1000 HP and was purchased by the firm from M/s. Aggarwal Steel Traders, Amloh Road, Motia Khan, Mandi Govindgarh, vide their Bill No. 38 dated 27-9-1986 for Rs. 2,15,000. A payment of Rs. 2,00,000 was made to M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the books of account for the purchase of the electric motor, which represented concealed income of the assessee from undisclosed sources. 3. The assessee appealed and ld. CIT(A), for the reasons given in detail in the impugned order, upheld the order of the Assessing Officer. 4. Sh. D.K. Gupta, Advocate, learned representative of the assessee, submitted that the departmental authorities were not justified in making the impugned addition. Sh. Gupta admitted that actually the assessee-firm had purchased an electric motor of 1000 HP manufactured by BHEL, which had been installed by the assessee in its mill and this is also proved from the fact that during the course of search, no electric motor of 500 HP of BHEL was found installed in the mill of the assessee. Sh. Gupta submitted that the electric motor of 1000 HP made by BHEL was purchased by the assessee-firm from Aggarwal Steel Traders, vide their Bill No. 38, dated 27-9-1986 for Rs. 2,15,000 and the particulars regarding this motor, are not correctly stated in the bill. It was submitted that a payment of Rs. 2,00,000 was made by the assessee-firm to Aggarwal Steel Traders, vide cheque No. 577833 dated 6-9-1986 drawn on UBI a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor to its allied concern, M/s. Northern India Steel Rolling Mill. From the above averment of Sh. Mittal, Sh. Gupta submitted that, in fact, Jay Shree Trd. Co. had supplied two electric motors of 1000 HP each to Aggarwal Steel Traders, even though in the sale voucher/bill issued by them, sale of only one motor has been mentioned. It was submitted that these electric motors were transported by Jay Shree Trd. Co., through Ajanta Roadlines, vide GR. No. 10986. Sh. Gupta submitted that from a copy of this GR, it is clear that two electric motors were transported by Jay Shree Traders to Aggarwal Steel Traders through Ajanta Roadlines and one of such motor was sold to the assessee-firm for a consideration of Rs. 2,15,000 and the other to Gemini Ind. Ltd. who, in turn, sold it to their allied concern, Northern India Steel Rolling Mills. In support, Sh. Gupta has furnished a photocopy of GR issued by Ajanta Roadlines, wherein numbers of pieces transported is indicated as (2) and the approximate weight was 5000 kg. Sh. Gupta also furnished a copy of wiring test report in the case of Northern India Steel, wherein the electric motor installed at their premises, bearing No. 45003A-402-11-02, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer to call for the books of Gemini Indl. Ltd., to ascertain whether this company had purchased motor from Aggarwal Steel Traders or not and as to whether it could be proved from its books that it had, in fact, purchased any electric motor from a kabari at Delhi, which request was rejected by the Assessing Officer. Sh. Gupta submitted that there was a violation of the principles of natural justice and, as such, the orders passed by the departmental authorities are required to be quashed on this ground alone. Reliance was placed in CIT v. Sham Lal [1981] 127 ITR 8l6/[1980] 4 Taxman 452 (Punj. Har.), V. Raju v. CIT [1984] 147 ITR 212 (Mad.) and Colonisers v. Asstt. CIT [1992] 41 ITD 57 (Hyd.) (SB). 6. Mrs. Parneet Mahal, learned Departmental Representative, relied on the orders of the CIT(A) as well as the Assessing Officer and submitted that from photocopy of Bill No. JST 112, dated 10-9-1986 issued by Jay Shree Trd. Co., it is clear that there was sale of one electric motor for Rs. 4,10,000 to M/s. Aggarwal Steel Trd. It was submitted that the contention of Sh. Gupta that Jay Shree Trd. Co. had supplied two electric motors of 1000 HP each, is proved wrong by this document. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has been made either by the Assessing Officer or by the CIT(A) to verify the then prevalent market price of 1000 HP BHEL make electric motor. Ld. first appellate authority has made an observation in para 2.3 of the impugned order that the prevalent market price of 1000 HP electric motor was about Rs. 4,00,000, but there has been no material on record to support this because in the statement recorded by the ADI, Sh. Mittal, in response to question No. 25, has stated that he has sold another 1000 HP BHEL make electric motor to Aggarwal Steel Re-Rolling Mill, Mineri, against Bill No. 67, dated 9-1-1987 for a sum of Rs. 2,95,000. During the course of cross-examination, in response to question No. 29, Sh. Mittal admitted that he has issued a Bill No. 68, dated 9-1-1987 to Gemini Indl. Ltd., to cover up on-money of Rs. 2,05,000 received by the assessee. Relevant question and answer as under:- "Q. 29. One BHEL electric motor of 1000 HP has been sold by you to Gemini Indl. Ltd., vide your Bill No. 68 dated 9-1-1987 for a total consideration of Rs. 2,05,000 and in the bill the kw has been mentioned 375. Do you confirm? Ans. I have not sold any electric motor of 1000 HP/375 kw to them ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her they had sold two 1000 HP electric motors to M/s. Aggarwal Steel Traders. The Assessing Officer may also call for the books of account of Gemini Indl. Ltd. and M/s. Northern India Steel Co., who are in possession of 1000 HP BHEL make bearing Sr. No. 45003A-402-11-02, which number is adjacent to the number of 1000 HP electric motor installed in the premises of the assessee, with a view to find out as to whether they have also purchased this electric motor from Sh. Surinder Kumar Mittal, Prop. Aggarwal Steel Traders. The Assessing Officer may make any other enquiry which he may deem fit in this regard and confront the assessee with the result of those enquiries and then make the addition, if the facts and circumstances of the case so justify, after giving due and proper opportunity to the assessee. 8. In the result, the appeal is treated as allowed for statistics. Per Bedi- I have gone through the order proposed by my learned brother but find myself unable to agree with the conclusion arrived at by him. It would not be worthwhile to repeat the facts, as these are well-incorporated above. 2. Before first appellate authority, seized material was produced by the department in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove, in my view, this is a fit case where addition of Rs. 2,05,000 made on account of unexplained investment in purchase of electric motor of 1000 HP of BHEL make, deserves to be confirmed. Bill was admittedly issued by the seller for lesser Horse Power (HP) as well as for less price and, on enquiry, after search under section 132 at the business premises of the assessee, seller conclusively admitted this fact and even in re-examination and further cross-examination by the assessee, seller maintained his stand taken earlier. Categorical admission on the part of the seller too strengthen the case of the revenue. Accordingly, in view of facts and circumstances of the case, the impugned addition made by the Assessing Officer and confirmed by ld. CIT(A) merits confirmation. It is confirmed and the appeal fails. ORDER U/S 255(4) OF THE INCOME-TAX ACT, 1961 On a difference of opinion between the Members who heard this appeal, the following point of difference is referred to the Hon'ble President for the opinion the Third Member:- Whether, on the facts and in the circumstances of the case, the view of the Accountant Member restoring the question of addition of Rs. 2,05,000 on acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... follows:- "(i) The motor was of 1000 HP and it had been purchased from M/s Aggarwal Steel Traders of Mandi Gobindgarh vide Bill No. 38 dated 27-9-1986 for Rs. 2,15,000. Further a payment of Rs. 2,00,000 had been made vide cheque dated 6th September, 1986 and balance of Rs. 15,000 by means of a cheque dated 10-10-1986 drawn on the Union Bank of India. (ii) The electric motor purchased from M/s Aggarwal Steel Traders although of 1000 HP had been mentioned as 500 HP and whereas the correct number of the motor was 45003A-401-11, it had wrongly been mentioned in the bill as 4000608-A-01. (iii) That the capacity of the electric motor had been understated since the load sanctioned by the PSEB was lesser." 4. After recording the statement of Shri H.R. Gupta, the Assessing Officer made enquiries from the seller, i.e., M/s. Aggarwal Steel Traders and proceeded to record the statement of Shri Surinder Kumar Mittal S/o Shri Kishori Lal, Prop. M/s Aggarwal Steel Traders. Shri Mittal deposed before the Assessing Officer that the electric motor had been purchased from M/s. Jay Shree Trading Co., Ahmedabad vide bill dated 10th September, 1986 for a sum of Rs. 4,10,000 and it was of 1000 H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he whole case of the department had been based on the statement of Shri Surinder Kumar Mittal s/o of the Prop. of M/s. Aggarwal Steel Traders on which no reliance could be placed more so when an electric motor of 1000 HP stated to have been purchased by M/s Aggarwal Steel Traders from M/s Jay Shree Trading Co. for Rs. 4,10,000 could not be sold a few days thereafter for a much lower consideration of Rs. 2,15,000; (vi) That on being concerned, Shri Mittal tried to come out of the situation by stating that the said motor was actually sold to the assessee for a sum of Rs. 4,20,000 whereas the bill was issued for a smaller amount of Rs. 2,15,000; (vii) That on re-examination by the Assessing Officer, Shri Mittal in order to cover up the difference of Rs. 2,05,000 had stated that the same was brought into the books of account by him by showing the sale of another electric motor to some other party and which he in fact purchased from a 'kabari' at Delhi. That Shri Mittal in fact had issued a bogus sale bill to the said party, i.e., M/s Gemini Industrial Ltd.; (viii) That the correct fact was that M/s. Jay Shree Trading Co. had supplied two electric motors of 1000 HP each to M/s Agg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned Counsel for the assessee, this request was rejected and it clearly violated the principles of natural justice. 8. The ld. D.R., on behalf of the department, on the other hand, supported the order of the CIT(A) stressing on the following:- (i) The photocopy of Bill No. 112 dated 10-9-1986 issued by Jay Shree Trading Co. clearly established that there was sale of one electric motor for Rs. 4,10,000 to M/s. Aggarwal Steel Traders and the contention of the assessee's Counsel to the effect that two electric motors of 1000 HP each were supplied is incorrect; (ii) The GR in respect of transportation from Ahmedabad through Ajanta Roadlines clearly established that the original figure was 1 which was interpolated to show a figure of 2; (iii) In the octroi receipt dated 15-9-1986, the octroi paid was Rs. 1,250 but the number of motor/motors transported was not mentioned and it was presumed that only one electric motor had been transported. 9. The learned Accountant Member who wrote the initial order, accepted the view point canvassed on behalf of the assessee through its Counsel by initially referring to the contradictions in the deposition of Shri Mittal. Question No. 3 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and whether it could be further proved that a motor had been purchased from a Kabari at Delhi as stated by Shri Mittal. According to learned Accountant Member, the request had been turned down by the tax authorities without assigning any specific reasons. The learned Accountant Member also in the concluding portion of his order referred to the identification number of the electric motors purchased by the assessee as also the motor which was initially sold to M/s Gemini Industrial Ltd. who ultimately sold to Northern India Steel Rolling Mills. 14. In view of the above, the learned Accountant Member held it to be a fit case in which the matter could be restored back to the file of the Assessing Officer for fresh adjudication asking him to make necessary enquiries from M/s Jay Shree Trading Company, Ahmedabad about the number of the motors sold by it to M/s. Aggarwal Steel Traders, to call for the books of M/s. Gemini Industrial Ltd. and M/s Northern India Steel Trading Co. which was purported to be in possession of a 1000 HP BHEL electric motor bearing Sr. No. 45003 A-402-11-02 which number was adjacent to the number of 1000 HP electric motor installed at the premises of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether 5000 kg. was the weight of one electric motor of 1000 HP or two; (ii) Whether interpolation in the GR was from '1' to '2' or vice versa; (iii) Whether M/s Aggarwal Steel Traders had sold an identical electric motor to M/s Gemini Industrial Ltd. who in turn are purported to have sold to an allied concern and for which purpose the books of account of the said party were required to be examined as requested at the assessment stage by assessee; (iv) What was the market value of a 1000 HP BHEL electric motor; and (v) The availability or otherwise of the photocopy of a letter purported to have been written by the Ahmedabad party to M/s Aggarwal Steel Traders stating that they had despatched two electric motors instead of one and the averment in the statement of Shri Mittal about the existence of the said letter. 17. In my opinion, the learned Accountant Member has taken the correct view to restore the matter back to the file of the Assessing Officer for examination de novo on merits and this could have been the proper order to have been passed on the facts and circumstances of the case. The ld. Judicial Member, on the other hand has not at all referred to the aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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